Is there any effect on credit reports?

This varies in relation to our clients current credit rating. For our typical client, enrollment in our program improves their credit rating. Most creditors report delinquent accounts as "current" after receiving one to three consecutive payments as arranged by and paid through our agency. The process and time frame varies with each creditor and type of account. Some creditors, however, do not re-age accounts and may continue or begin to report accounts as delinquent. This is most often true on personal loans, note accounts and lines of credit. Of course, accounts that have already been reported as "charged off" or "written to profit and loss" will not change.

Some creditors may report accounts as being paid by debt management, credit counseling or under arrangement. Such a report may be considered derogatory on accounts in good standing; however, on delinquent accounts it may be considered more favorable than being reported as delinquent or past due. How this is regarded by potential lenders in the future is entirely dependent on the client’s financial situation at that time, the client’s payment history, and the particular views of the lender. While some lenders may regard such status as derogatory, others may regard it as a sincere and professional means of satisfying the client’s financial obligations. You should also note that many creditors will remove this status once the account is paid off. Some creditors will even re-open the account with a small line of credit for those clients who successfully pay off the account as arranged by our agency.

Our organization deals with hundreds of creditors nationwide, each creditor maintaining their own policies and procedures. Therefore, we have no control over, nor do we make any guarantee, regarding how creditors my elect to report a client’s account.

In general, however, assuming past due accounts are re-aged and the client remains current in our program, the only time a creditor’s report may be less favorable to our client is when their accounts are current or marginally past due upon enrollment. This is true when it is assumed that the client would have the ability to maintain a current status without seeking the relief that our program offers. In any case, clients should be aware that consumers have a legal right to add a short explanation to their credit report which may help clarify the circumstances. On must always remember, however, that there is no substitute for perfect credit.